Top Growth Stocks for May 2022
Growth investing is one of two main fundamental investment strategies, the other being value investing. Investors employing a growth investing strategy will typically place the majority of their portfolio in growth stocks, which are shares of companies with earnings or sales expected to grow at a significantly faster rate than the rest of the market. These companies generally don’t pay dividends at this stage of their industry life cycle, since all earnings are usually reinvested back into the business to generate even more earnings or revenue in the future.
The primary way that investors expect to earn profits from growth investing is through capital gains. Classic examples of growth stocks in recent years have included Apple Inc., Amazon.com Inc., and Netflix Inc.
Growth stocks, as represented by the Russell 1000 Growth Index, have underperformed the broader market over the past year. The Growth Index has provided a total return of 0.6% over the past 12 months, below the benchmark Russell 1000 index’s 4.4% total return. These market performance numbers and all statistics in the tables below are as of April 21, 2022.
Here are the top three stocks with the fastest earnings per share (EPS) growth, the top three stocks with the fastest sales growth, and the top three stocks ranked according to a 50/50 weighting of their combined EPS and sales growth.
Top Growth Stocks by EPS Growth
These are the stocks with the highest year-over-year (YOY) EPS growth for the most recent quarter. Rising earnings show that a company’s business is growing and is generating more money that it can reinvest or return to shareholders. Companies with quarterly EPS of more than 2,500% were excluded as outliers.
|Top Growth Stocks by EPS Growth|
|Price ($)||Market Cap ($B)||EPS Growth (%)|
|Boston Properties Inc. (BXP)||127.13||19.9||2,260|
|Digital Realty Trust Inc. (DLR)||150.34||42.8||2,220|
|EQT Corp. (EQT)||42.04||15.8||1,940|
- Boston Properties Inc.: Boston Properties is a developer, owner, and manager of Class A office properties in Boston, Los Angeles, New York, San Francisco, Seattle, and Washington, DC.
- Digital Realty Trust Inc.: Digital Realty Trust is a real estate investment trust (REIT) that owns and manages technology-related properties. The company focuses on data center, colocation, and interconnection-related properties. Digital Realty Trust announced in early March that its board of directors has approved a 5% increase in its quarterly cash dividend on common stock to $1.22 per share. The first of this new, higher dividend was scheduled to be paid on March 31, 2022.
- EQT Corp.: EQT is an integrated energy company focused on natural gas production in the Appalachian area. The company explores for and produces natural gas and natural gas liquids (NGLs). EQT announced in early February financial results for Q4 of its 2021 fiscal year (FY), the three-month period ended Dec. 31, 2021. The company’s net income attributable to its shareholders was up over 28-fold as revenue increased by more than threefold compared to the year-ago quarter. EQT announced a new $1 billion share repurchase program during the quarter.
Top Growth Stocks by Sales Growth
These are the stocks with the highest YOY sales growth for the most recent quarter. Rising sales can help investors identify companies that are able to grow revenue through organic or new ways, as well as find growing companies that have not yet reached profitability. In addition, EPS can be significantly influenced by accounting factors that may not reflect the overall strength of the business. However, sales growth can also be potentially misleading about the strength of a business because growing sales on money-losing businesses can be harmful if the company has no plan to reach profitability. Companies with quarterly revenue growth of more than 2,500% were excluded as outliers.
|Top Growth Stocks by Revenue Growth|
|Price ($)||Market Cap ($B)||Revenue Growth (%)|
|Liberty Broadband Corp. (LBRDA)||126.43||21.2||545.6|
|Coterra Energy Inc. (CTRA)||29.97||24.4||387.6|
|Upstart Holdings Inc. (UPST)||75.30||6.4||252.0|
- Liberty Broadband Corp.: Liberty Broadband is a company that invests in communications companies offering cable, data, wireless, video, voice, and other services. It holds interests in Charter Communications Inc., Skyhook Holding Inc., and other related companies.
- Coterra Energy Inc.: Coterra Energy is an independent oil and gas exploration and production company with operations focused in the Permian Basin, Marcellus Shale, and Anadarko Basin. The company announced in late February financial results for Q4 FY 2021, the three-month period ended Dec. 31, 2021. Net income rose more than sevenfold as revenue increased nearly fivefold compared to the year-ago quarter. Coterra, formerly named Cabot Oil & Gas Corp., was formed out of a merger with Cimarex Energy Co. on Oct. 1, 2021. Its fourth quarter financial results were thus boosted by the combined results of the two companies that merged, as opposed to just the results of Cabot Oil & Gas. Coterra also announced in its earnings press release that its board of directors approved a 20% increase to the company’s annual base common dividend. The increase raises the dividend from $0.50 per share to $0.60 per share, or $0.15 per share per quarter.
- Upstart Holdings Inc.: Upstart Holdings is a holding company whose subsidiaries offer a cloud-based artificial intelligence (AI) lending platform to make credit more available. The platform also helps bank partners to reduce the risk of lending. Upstart announced in mid-February that its board of directors has approved a share repurchase program authorizing the company to purchase up to $400 million of common stock. The buyback program does not obligate the company to repurchase any amount of stock. Upstart said that it may repurchase shares from time to time depending on business and market conditions and other factors.
Top Growth Stocks by EPS and Revenue
These are the top growth stocks in the Russell 1000 Index as ranked by a growth model that scores companies based on a 50/50 weighting of their most recent quarterly YOY percentage revenue growth and most recent quarterly YOY EPS growth. Both sales and earnings are critical factors in the success of a company. Moreover, ranking companies by only one growth metric makes a ranking susceptible to the accounting anomalies of that quarter (such as changes in tax law or restructuring costs) that may make one or the other figure unrepresentative of the business in general. Companies with quarterly EPS or revenue growth of more than 2,500% were excluded as outliers.
|Top Growth Stocks by EPS and Revenue|
|Price ($)||Market Cap ($B)||Revenue Growth (%)||EPS Growth (%)|
|EQT Corp. (EQT)||42.04||15.8||235.7||1,940|
|Upstart Holdings Inc. (UPST)||75.30||6.4||252.0||N/A (see company description)|
|Boston Properties Inc. (BXP)||127.13||19.9||9.9||2,260|
- EQT Corp.: See above for company description.
- Upstart Holdings Inc.: See above for company description. An EPS growth rate could not be calculated for Upstart since its EPS in the previous quarter (Q4 FY 2020) was so low that it rounded to zero. Its diluted EPS in Q4 FY 2021 was $0.61.
- Boston Properties Inc.: See above for company description.
The comments, opinions, and analyses expressed herein are for informational purposes only and should not be considered individual investment advice or recommendations to invest in any security or adopt any investment strategy. While we believe the information provided herein is reliable, we do not warrant its accuracy or completeness. The views and strategies described in our content may not be suitable for all investors. Because market and economic conditions are subject to rapid change, all comments, opinions, and analyses contained within our content are rendered as of the date of the posting and may change without notice. The material is not intended as a complete analysis of every material fact regarding any country, region, market, industry, investment, or strategy.